Oil prices eased on Friday but were heading for weekly gains on the uncertainty over Middle East supplies and a larger-than-expected crude stocks draw in the United States.
Brent crude futures fell 71 cents, or 0.67%, to $105.21 a barrel by 0352 GMT, while US West Texas Intermediate crude futures were down 77 cents, or 0.79%, to $97.20.
WTI settled up more than 3% on Thursday after a big US crude stock draw on hurricane production shut-ins.
For this week so far, Brent increased 0.44%, while WTI jumped 5.81%.
“Uncertainty in the Middle East and concerns over the sustainability of oil flows through the Strait of Hormuz has the market pricing in a significant risk premium,” ING analysts wrote in a note on Friday.
There needs to be some kind of agreement between the US and Iran to provide the market with more confidence that stronger oil flows from the region will continue, they added.
Supply jitters also rose as attacks around the Strait of Hormuz have surged over the past 10 days, with Iran saying it was stepping up strikes in response to the US blockade of its ports and tougher sanctions introduced last month.
Total Hormuz clearance averaged 11.62 million barrels per day over seven days to October 13, about 68% of the 17.15 million bpd baseline, according to ship tracking firm Kpler.
“Intensified Iranian attacks drove Gulf crude flows sharply lower,” Kpler analysts said in a report on Thursday, adding that they expected a slower and more uneven Hormuz recovery, without a comprehensive political deal.
The Houthis fired missiles at the presidential palace complex in the southern city of Aden on Thursday, killing two guards, while the Saudi-led coalition in Yemen detailed dozens of attacks on Saudi infrastructure in the escalating conflict.
The International Energy Agency agreed on Thursday to release over 20 million barrels of diesel to the market and any oil remaining from a record release of emergency reserves pledged in March to boost supply and cool soaring prices.
During the previous trading session, oil prices rose overnight in a sign that “investors were dissatisfied with these measures,” Haitong Futures said in a note on Friday.
“What would really cool the oil market is an easing of tensions in the Middle East.”
The Trump administration is considering lifting sanctions on some so-called shadow fleet vessels that have transported oil and petroleum products from countries including Russia, Iran and Venezuela, in an effort to reduce record-high global freight rates, a US official said on Wednesday.
The discussions come days after US President Donald Trump temporarily lifted sanctions on Russian diesel fuel, a move met with criticism from Ukrainian President Volodymyr Zelenskiy, European countries and some of Trump’s fellow Republicans.
(Reporting by Sam Li in Beijing and Siyi Liu in Singapore; Editing by Cynthia Osterman and Stephen Coates)